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TMI Blog2014 (4) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 2. In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in confirming issue of Notice u/s.148 of I.T. Act. 3. In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in confirming re-assessment order passed u/s. 147 of I.T. Act. 4. In law and in facts and circumstances of the Appellant's case, the Id. Commissioner of Income-tax (Appeals) has erred in dismissing the ground that Appellant is following cash method of accounting instead of mercantile method on the ground that there was no addition on this account. 5. In law and in facts and circumstances of the Appellant's case, the learned Commissioner of Income-tax (Appeals) has erred in confirming that amount of Rs.50,49,898 should be assessed as interest income instead of short term capital gain. 6. In law and in facts and circumstances of the Appellant's case, the learned Commissioner of Income-tax (Appeals) has grossly erred in holding that levy of interest u/ss. 234A, 234B and 234C of I.T. Act is consequential. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in confirming re-assessment order passed u/s. 147 of I.T. Act. 4. In law and in facts and circumstances of the Appellant's case, the Id. Commissioner of Income-tax (Appeals) has erred in dismissing the ground that Appellant is following cash method of accounting instead of mercantile method on the ground that there was no addition on this account. 5. In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in confirming loss of Rs.10,42,652 as speculative loss. 6. In law and in facts and circumstances of the Appellant's case, the learned Commissioner of Income-tax (Appeals) has grossly erred in holding that levy of interest u/ss. 234A, 234B and 234C of I.T. Act is consequential. 7. In law and in the facts and circumstances of the Appellant's case, the learned Commissioner of Income-tax (Appeals) has grossly erred in rejecting Appellant's ground regarding initiation of penalty proceeding u/s.271(1)(c) of I.T. Act." Grounds of ITA No. 4139/Ahd/2007 "1. In law and in facts and circumstances of the Appellant's case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs. In this transaction the assessee took whole of the cost of the principal scrip and thus on this sale it booked short term capital loss of Rs.12.5 lacs. 3. This Short Term capital Loss was incorrectly booked by the assessee as no apportionment of the cost of acquisition between the principal scrip and the interest scrip was made. This leads to excess claim of loss. 4. Further during the course of the block assessment proceedings vide submissions dated 29-6-2004 it has been verified that losses in transactions of shares of HPCL and Reliance Industries Ltd. were booked through transactions for which no delivery was taken or given by the assessee. These transactions which have been ultimately settled without actual delivery come within the ambit of section 43(5) of the Act. The assessee has wrongly claimed set-off of loses in these speculative transactions against capital gains in other share transactions. 5. In view of the above and in view of Explanation 2 to section 147. I have reason to believe that income chargeable to tax for A.y. 2000-01 has escaped assessment. In view of this, notice u/s. 148 is issued to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the loan, the inherent properties of this transaction are us under: i. Against the "credit risk" the lendor may call for a security to be given to him. In a lending transaction the lendor has a right to enforce the security only, in case there is default in repayment by the lendee. ii. The rate of return in this transaction is dependent on the quality of the security and the credit worthiness of the lendee. iii. The total return in the transaction has a direct one to one correlation with the period of time for which money is lent. But for the eventuality of the lendee defaulting the return on the transaction cannot be negative. 5. All these inherent properties of a lending transaction are there in the "vyaj badla" transaction carried out by the appellants: i. Against the money lent the broker gives the securities of shares which are kept with the clearing house. The lien over these securities can be exercised by the appellants only if the broker goes bankrupt or refuses to repay the moneys lent. ii. The rate of return on the transaction is dependent on the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Counsel for the appellants contended that the accounts were filed with the return of income. The income was disclosed in the return under the head "capital gain". There is no escapement of income in case of Jethiben K. Patel Discretionary Trust. Similarly accounts were filed during the assessment proceeding, the same shows that the shares of Shri Rama Multitech Ltd. as investment in case of Harsiddh Specific Family Trust. In case of Nima Specific Family Trust in A.Y. 2000-01 order u/s. 143 was passed on 31.03.2003 and accounts were filed during the assessment proceedings. The same shows the shares of Hindustan Petroleum Corporation Ltd. and Reliance Industries Ltd. as investment, which has been accepted by the A.O. In A.Y. 01-02, accounts were filed during the assessment proceedings. The ld. Counsel further argued that even where return has been accepted u/s.143(1) and there is no tangible material with the A.O. and belief was merely on going through the return of income and nothing more re-opening held in case of CIT vs. Orient Craft Ltd. [2013] 29 taxmann.com392 (Delhi) bad in law. In case of Rasna Private Limited vs. ACIT, in Special Civil Application No. 375 of 2005 vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the A.O. and within the realism of him. In case of Nima Specific Family Trust in A.Y. 2000-01, notice u/s. 148 was within four years and assessee has not demonstrated with evidence that this issue even has been touched by the A.O. in first scrutiny assessment. The A.O. has ample power as held by the Supreme Court in various cases even cases reopened where scrutiny assessment had been made previously. Thus, both the ground nos. 2 & 3 are dismissed in all cases. 8. Ground no.4 in all the cases, is against not accepting cash method of accounting except Harsiddh Specific Family Trust in A.Y. 01-02. The A.O. assessed the case u/s.143(3) on the basis of mercantile system of accounting not on cash. Ld. A.R. for the assessee seriously not pressed the issue. Even does not aggrieve by the order of the A.O. Therefore, this ground of appeal is dismissed. 9. Ground no.5 in Nima Specific Family Trust in A.Y. 01-02 is against confirming loss of Rs.10,42,652/- as speculative loss and confirming loss of Rs.3,65,164/- in A.Y. 00-01 in this case. Ground no.5 in case of Jethiben K. Patel Discretionary Trust for A.Y. 2001-02 is against confirming the amount of Rs.50,49,898/- as interest incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h any detail of transfer of shares. Copy of demat account, copy of contract note to the A.O. to verify the nature of the transaction. Thus, he treated this transaction speculative loss and same is not allowed to be set out against the capital gain of other shares. 10. Being aggrieved by the order of the A.O. the assessee carried the matter before the CIT(A) who had confirmed the finding of the A.O. in all cases on similar findings as given by the A.O. in assessment. 11. Now assessee in all cases are before us and filed the copy of paper book which includes various letters submitted before the A.O. and CIT(A) and claimed that these transactions in case of Harsiddh Specific Family Trust, Nima Specific Family Trust (2 years) and in case of Jethiben K. Patel Discretionary Trust in A.Y. 01-02 are short term capital loss. The assessee also relied upon in case of DCIT vs. M/s. Paramount Ltd. in ITA No. 1760/Ahd/2007 for A.Y. 2003-04, wherein issue of speculative business loss was considered u/s.73. At the outset, ld. CIT D.R. supported the order of the CIT(A). 12. We have heard the rival contentions and perused the material on record. It is found from the order of the lower authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X
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